Stablecoin Supply Ratio Oscillator

16 oct. 2023

The Stablecoin Supply Ratio Oscillator (SSRO) is a cryptocurrency indicator designed for mean reversion analysis and sentiment assessment. It calculates the ratio of BTCUSD 's market capitalization to the sum of stablecoins' market capitalization and z-scores the result, offering insights into market sentiment and potential turning points.

Methodology:
The SSRO is calculated as follows-

method ssro(float src, array<float> stblsrc, int len) =>
    float ssr = src / stblsrc.sum()               // Source of the underlying divided by the sum of stablecoin sources
    
    (ssr - ta.sma(ssr, len)) / ta.stdev(ssr, len) // Z-Score Transformed

This ratio is Z-Scored to provide a standardized measure, allowing users to identify periods of market fear or greed based on the allocation of capital between the underlying and Stablecoins (USDT, USDC, TUSD, $CRYPTOCAP:BUSD, DAI, USDD, FRAX). The z-scored values indicate potential areas of discount (buying opportunities) or premium (selling opportunities) relative to historical patterns.

Customization:

• Underlying Asset: SSRO is customizable to different underlying assets, offering a versatile tool for various cryptocurrencies.
  
• Calculation Length: Users can adjust the length of the calculation, tailoring the indicator to short or long-term analysis.
  
• Visualization: SSRO can be displayed as candles, providing a visual representation of premium and discount areas.
  

Interpretation:
Market Sentiment: Lower SSRO values may indicate market fear, suggesting a preference for stablecoins as a relatively safer haven for capital. Conversely, higher values may suggest market greed, as more capital is allocated to the underlying asset.

Utility and Use Cases:
1. Mean Reversion Analysis: SSRO identifies potential mean reversion opportunities, guiding traders on optimal entry and exit points.


2. Sentiment Analysis: The indicator provides insights into market sentiment, aiding traders in understanding market dynamics.


3. Macro Analysis: The majority of cryptos follow \ correlate to BTCUSD , Therefore by assessing premium and discount areas of BTCUSD relative to the chosen underlying asset, users gain insights into potential market tops and bottoms.


4. Divergence Analysis: SSRO divergence from price trends can signal potential reversals, providing traders with additional confirmation for their decisions.


The Stablecoin Supply Ratio Oscillator is a valuable tool for cryptocurrency traders, offering a nuanced perspective on market sentiment and mean reversion opportunities. Its customization options and visual representation make it a versatile and powerful addition to the crypto analyst's toolkit.

26 oct. 2023

Notes de version

Removed USDD

23 nov. 2023

Notes de version

improved methodology, added support for plot export to new SuperTrend ToolKit

18 déc. 2023

Notes de version

Removed BUSD